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LONDON (Reuters) - Five years after the global financial crisis was sparked by a burst U.S. housing market bubble, property is booming again and even considered a safe-haven investment.

With many equity markets at record highs, government bonds offering scant returns and emerging markets looking fragile, investors are flocking to residential and commercial property.

Property offers relatively high returns, making it an attractive alternative to stocks and bonds.

Institutions managing commercial real estate portfolios in Britain and around Europe expect yields of between 6 and 10 percent, compared with a 10-year British gilt yield of 2.65 percent or just 1.7 percent for the equivalent German bond.

It offers an avenue for investors to diversify their portfolios and a hedge against potential inflation.

For some, particularly in emerging markets, property rights and the rule of law in developed economies also make bricks and mortar a secure place to park their money, even if pockets like the high-end London market look overheated.

"Since the end of May, we've seen a big increase in the volume of U.S. capital looking at Europe, and Asian sovereign wealth funds are interested too," said Simon Martin, partner at Tristan Capital, a private equity firm focusing on commercial real estate.

These are big investors looking to sink 50-150 million euros into projects, Martin said. And his business is now "enquiry-driven", rather than a matter of flying round the world seeking out interest.

Martin says Tristan's fund is selective, and hopes to double investors' money over four years or so.

SAFER THAN UNCLE SAM?

But it's not a one-way bet. Banks are lending less as they continue to shrink their balance sheets, while borrowers will have to refinance around 150 billion euros of commercial real estate loans across Europe in the next few years. Falling real wages continue to be a drag on economic growth.

Fears of a bubble are rising as house prices soar in some regions, even in non-traditional hot spots like Germany. That has prompted action by regulators in several countries to cool overheating markets.

Some figures are eye-watering. Asking prices from home-sellers in London rose 10 percent in a single month in October, prices in China are rising at their fastest rate in three years, and the German central bank has warned that apartments in big cities may be over-valued by as much as 20 percent.

Meanwhile, the first bond backed by home-rental cash flows, a $300 million asset-backed security from private equity giant Blackstone (BX.N), has been given a triple-A credit rating.

That means a bond backed by the rents from foreclosed properties in the United States that a private equity group bought up after the market crash is deemed as safe or safer an investment than bonds issued by the United States itself.

Taylor noted that while the hunt for yield will boost demand, property's long-run fundamentals are driven by how the real economy affects occupiers.

FUND FLOWS

Despite these red flags, money is flowing into global property funds.

Figures from Lipper show assets under management in property funds around the world increased by $29.8 billion in the first nine months of this year to $452.6 billion, a rise of 7 percent.

Japan has seen the biggest increase, followed by Europe, the United States and Britain, according to Lipper.

The Lipper data shows that Japanese property funds have performed best so far this year, posting a cumulative gain of 22 percent in the nine months to the end of September.

These flows might not sound massive when set against the value of all assets under management, which last year stood at $62.4 trillion.

A Reuters poll of 53 fund managers showed property accounted for only 1.6 percent of their global balanced portfolio in October, and that allocation has remained within a tight range of between 1.3 percent and 2 percent for the last four years.

But the size of the global stocks and bonds universe means it takes only a fractional shift in flows to unleash potentially significant changes in prices for smaller asset classes like property.

Hughes said certain areas of the British property market, notably prime residential property in London, into which most overseas capital is being poured, looked overheated.

But his business is attracting growing interest from investors in Asia, the Middle East and Europe, a trend he believes is believes will continue for the "foreseeable future".

As overseas money comes to Britain, so UK-based investors are looking abroad.

"Investors are attracted by the relatively high yield that bricks and mortar provide. There's a craving for yield, particularly from long-term pension schemes," said Taylor at Hermes Real Estate.

British Telecom's (BT.L) pension fund, one of the biggest in the country, has its money in Hermes funds.

Taylor's real estate fund is 87 percent invested in the UK. But his longer-term strategy is to be 30 percent overseas, particularly in developed markets like the United States, Northern Europe, Australia and selected markets in Asia.